Presentacin Plantilla Telefnica

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The best framework for NGN
IDATE, Montpellier November 14th, 2007
Pablo Pfost Telefónica, S.A.
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THE SECTOR HAS PRESSING CHALLENGES
Increasing demands on networks capacity
Existing Telecom networks cannot cope with new
market demands
Access Speed (Mbps)
x5
50
Fixed
x5
x5
10
Mobile
2
7
1,4
2003
2006
2009

• Ultra High Broadband (trunk access)
• Mobility
• Multiservice (image, voice, data, music)
• Multiple types of access devices

Volume Transferred (Petabytes)
x7
x3
2003
2006
2009
Strong need of investment and innovation
requiring a supporting framework
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...THAT REQUIRE URGENT AND EFFICIENT SOLUTIONS

• Implementing, where appropriate, geographic
  segmentation thus triggering the latent
  investment by all market players.
• After a transitory period, moving from wholesale
  regulated offers to commercial agreements.
• Allowing for transparent traffic priorities
  encouraging innovation and efficient investment.
• Promoting new business models and different
  tiered services
• Encouraging customer services innovation by
  jointly developing network innovation.
• Improving time to market would contribute to
  consumer welfare
• Different levels of non-discrimination have
  already showed to be even more efficient than
  functional separation

Better aligning regulation and competitive
market dynamics
Allowing customers to benefit from QoS
differentiated offers
Enabling efficient matching between new network
and market demands
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BEING FUNCTIONAL SEPARATION NOT THE RIGHT ONE

• No clear evidence of Openreach positive impact at
  improving the level of competition in Broadband
  markets compared to other countries with less
  intrusive remedies (e.g. Reference offers)

COCOM data - Broadband access in the UE
Situation at 1 July 2007

• There is a growing public concern about
  investments in NGANs in the UK, e.g. Minister
  Stephen Timms statements to Financial Times.

• BT share price has underperformed compared to Dow
  Jones Telecoms Index (6 Nov. 2007)

() ULL includes Full shared ULL. Total
Wholesale DSL market includes Full ULL Line
Sharing Bitstream access resale
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WE SEE MANY ADVANTAGES IN GEOGRAPHIC SEGMENTATION
AS OPOSED TO OTHER OPTIONS

• Geographic Segmentation
• Adjusts regulation to real conditions in markets
• Immediate and non-disruptive application
• Triggers investment and innovation
• Provides market-led incentives to all players

• Functional Separation
• Consolidates access network monopolisation
• Long period for effective application
• De-couples network deployments from services
  innovation
• Risk of misuse for other non-strictly regulatory
  reasons and objectives company restructuring
  aids, protectionism objectives, etc.

Forward looking capable to consider present and
future sector challenges
Backward looking tailored to competition
problems in mature copper networks
Functional separation freezes a regulatory model
of competition in services over a single network
while the geographic segmentation model opens
ways to greater competitive diversity including
inter-platform competition
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NGNs and innovation

• Traditional networks
• Intelligence in the core of the network
• Dumb devices connected at the edge
• Some believe that NG converged IP networks should
  be
• Dumb networks
• Connecting intelligent devices
• and that innovation should move from core to the
  edge
• But the reality is that
• Need intelligence in the network
• To enable lots of intelligent devices at the edge

• NGN need innovation in the core and at the edge

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NGNs and prioritisation

• Need to differentiate blocking or degrading
  traffic from the competitive use of management
  tools
• Allowing the creation of wider consumer choice
  and different services
• Net neutrality regulation risks eliminating
  commercial arrangements and severely restricting
  experimentation and innovation

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IN SUMMARY

• Europe competitiveness needs new networks
• New networks need investment and innovation
• To foster investment and innovation a
  forward-looking regulatory approach is needed
• Telefónica proposes a simple investment-friendly
  regulatory model based on geographic segmentation
  which
• Fits into the current regulatory framework
• Gives infrastructure competition a pivotal role
• Ensures incentives for NGAN investments for all
  market players
• Telefónica is against any regulation of traffic
  or regulatory led separation of networks

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